This document discusses different approaches to business process transformation, including Business Process Reengineering (BPR), Shared Services Centers (SSC), and Business Process Outsourcing (BPO). It provides an overview of each approach and recommends that organizations combine all three - using SSC as the core approach and leveraging BPR and BPO to further improve processes and achieve efficiencies. The document also emphasizes that new technologies will continue to emerge that can enhance processes, raising expectations and performance benchmarks over time.

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As new technology will emerge to enhance processes,
new expectations will come which will raise the bar in
a competitive environment
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ince early 1990, Business Process
Reengineering (BPR), Shared
Services Centres (SSC) and more
recently Business Process Outsourcing
(BPO) have been the preferred options
for companies looking for service to cost
optimisation for major corporations.
Three ways to transformation
So what are these three methods
employed to instigate change?
BPR has been and remains a
popular approach used to improve
business processes efficiency. It is
progressive and must be permanent,
does not require major investments
and can be used at different stages of
a transformation programme either as
a stand alone project or combined with
another initiative.
SSC imply to consolidate functions
across businesses and to move
to professional services and to a
contractual relationship with internal
customers. This approach represents
a major breakthrough that will be
implemented in two to three years
depending on the scale and complexity
of operations, the quality of project
governance and the capability to
manage transformation.
BPO have been used as an additional
way to generate savings and/or to
integrate external expertise. If the
strategy retained is outsourcing, a
significant effort will be required to
prepare the request for proposals, select
the BPO provider, negotiate the BPO
contract and to transfer knowledge and
activities to the provider.
Although, a lot of work has been
done to improve support processes,
it is generally recognised that there
is still room for further improvement
and it is disconcerting to realise that
the majority of senior executives say
that their initiatives did not deliver the
expected benefits. The average reward
achieved through SSC is in fact a 20 per
cent cost saving, with a difference of 23
per cent between expected and achieved
benefits, with relevance mainly for
European organisations.
Initiate the transformation
programme through a Business Case
Such a transformation programme
must start within a framework that
confirms the vision, goals, the return
on investments and the timeline and
obtains support from management
executives. Planning the entire process
competently with clear expectations
from start to end is a key requirement to
achieve the desired results.
Assessment includes: data collection
on loaded salary costs, direct and
indirect costs such as IS and Facilities,
headcounts and full time equivalent
and volumes per output. Also needed
in the assessment is a consideration
of influencing factors such as:
current environment reviews on an
organisation, people competencies,
processes, relevant technologies, as
well as change readiness. The validated
Business Case integrates the scope and
delivery model, the transition planning,
and will be included in a Project Charter
for project monitoring.
Build the right network of Shared
Service Centres
SSC implementation will be driven by
the choice of the appropriate delivery
model between local and regional
functions and the localisation of
the SSC platforms balancing labour
arbitrage and transition costs (including
project governance and social impact).
If easy access to the SSC is required or
the expertise to manage remotely is low,
it is more appropriate to avoid offshore
sites and select an onshore location.
Corporations are progressively moving
from national to regional or global
offshore SSC serving multiple countries:
in Europe 40 per cent are maturing
offshoring, only seven per cent have
done it (ref: Hackett 2006).
Communication is often
underestimated or poorly executed.
Implementation of SSC is a radical
change as several employees will leave
the company and those remaining
will have to get used to best in class
processes interacting with remote
locations. In order to succeed in that
transformation, we recommend building
multi functional teams including HR
and experts in change management.
When well executed, SSC
implementation can deliver payback
in a time scale ranging between one to
three years depending on the size of
the project and on the initial processes
efficiency. At this point, SSC needs
first to stabilise service delivery for
each customer for all processes and
then to consider ways to enhance its
performance either through BPR and/
or BPO.
Stabilise and improve end to end
processes internally
The duration of the stabilisation period
depends on the processes diversity
before transfer and on SSC‘s ownership
on corporate transformation. SSC will
simplify and standardise processes
using a management approach like
Six Sigma or TQM and investing in
productivity tools (Scanning with OCR,
EDI, Workflows, Expense management
tools, Reporting etc.) to reduce manual
work, hands-off and cycle time.
Think on this – what is not measured
does not improve.
You should define key performance
indicators and metrics and regularly
compare against targets and industry
benchmarks. Using simple but reliable
reporting tools will enable you to update
the service level and cost baseline of
the SSC and to monitor progress and
support investments requests.
At this point, general management
might also consider partial or complete
outsourcing of those processes. The
drivers for making a BPO decision
include SSC poor results, an opportunity
to sell SSC as an asset, investment
required to move forward, urgency to
generate additional savings, and/or
proven ability of the BPO provider to
reach a higher level of performance.
Extend the SSC functional scope
and customer portfolio
To leverage investments and to
capitalise on expertise it has developed,
it might be decided when the network
of SSC platforms are covering all
countries, to extend the scope of the
SSC: from a SSC dedicated to a function
to a Global Shared Services organisation
covering all support functions including
Finance, Human Resources, IT,
Facilities and Services, Procurement,
Sales Administration, Legal and Tax,
Communication. In that model Corporate
SVP like CFO or CIO will continue to
define strategies, fix objectives and
allocate means and SSC will deliver
contractual professional services against
best practices to both Corporation and
Business Units.
The SSC cycle could not be complete
without considering providing
services to external clients to
leverage management structure and
infrastructure investments and get
further synergies from additional
volumes. Based on our knowledge, few
companies outside the IT sector have
moved into this direction.
Get benefits from partnering with
outsourcing providers
The demand from large corporations
for service to cost optimisation will
continue to generate strong growth for
the next decade in each function. Deals
are more global on IT than they are on
Finance, Human Resources or Facilities
Management, probably due to local
regulations and local customer’s needs,
and to the resources involved in building
worldwide capacities with providers
focusing first on regional platforms.
Today some providers are addressing
several functions and multiple processes
for all sectors, some are specialised in
one industry addressing all support
functions (for example Healthcare), and
others are focused on a few processes
for multiple sectors (§such as back
office processes for Bank and Insurance
sectors). New players are either
building on functional or IT expertise
(from Software developer or from
Accountant to BPO provider) and/or
on their capacities (Labour advantage
or Funds to buy current assets from
corporations).
The consolidation of the market will
probably accelerate due to the fact
that providers will have to complete
their delivery model to face not only
global and regional needs but also local
requirements, and that investor will
push for industrial mergers or IPO.
The service to cost continuous
improvement process may challenge
current IT infrastructure (eg. Service
Oriented Architecture) as well as
Information Systems (eg. ERP functional
scope vs niche applicative solutions)
and beyond process efficiency refocus
the attention to data reliability (eg.
Customer, Supplier, Employee, Product
data administration).
We believe that providers will more
and more enhance end to end processes
like ‘Purchase to Pay', ‘Order to Cash',
‘Hire to Retire', ‘Record to Report' or
‘Install to Support' and move from
transaction based relations to value
added services with some profit sharing.
What could be the Best in Class
Transformation Model?
Based on the last 15 years worth of
experiences, it is fair to conclude that
process improvement will stay at a pace
specific to each organisation. Early
adopters although having reached a
high level of performance, are still
looking for further service to cost
optimisation. As new technology will
emerge to enhance processes, new
expectations will come which will raise
the bar in a competitive environment.
In addition, data harmonisation will
enable more and more transactions to
be processed accurately with limited
human interventions allowing to
invest in value added activities such
as decision support or corporate
performance monitoring.
To reach the next level of
performance, corporations will have
to combine BPR, SSC and BPO using
Shared Service as the core concept
to leverage BPR and BPO in order to
customerise service delivery models
combining regional efficiencies for
volume related activities and local
competencies for value added activities.
BPO and IT providers will have to adapt
their models and solutions to comply
with new expectations combining
global efficiency and returns and local
intimacy for value added.
For those still at the beginning of
their improvement programme, the pace
might be faster as they can leverage the
experience of other companies.
Managing transformation effectively
Jean-Claude De Vera, Biporis President, illustrates how to handle the general management
challenge of transforming Finance, Human Resources, IT, or Facilities from decision to
operational implementation for large companies
Before founding Biporis, Jean-
Claude De Vera had extensive
senior executive experience as
Auditor, Information Systems
and Finance Director, Business
Services and Profit Centres
Director.
He is President of Biporis,
that specialises in Process
Optimisation, Shared Services
and Outsourcing operations. He is
a member of the Shared Services
and Outsourcing Network (SSON/
IQPC) a and member of the IAOP.
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